Status: 03/23/2022 3:02 p.m
In the future, Russia will only approve payments for gas exports to Europe in its own currency. The announcement makes the value of the ruble rise.
Customers in Germany and Europe will have to pay their bills for Russian gas deliveries in rubles in the future. President Vladimir Putin said today during a televised government meeting that he had decided to establish a package of measures for payment in rubles. As a result, Russia no longer accepts payments in euros or dollars.
According to the report, the “unfriendly states” that Russia has blacklisted are affected. This includes Germany and all other EU countries, but also the USA, Canada and Great Britain. The president gave the central bank and the Russian government a week to implement an appropriate payment system.
Ruble stabilizes
Putin pointed out that the measure was a reaction to the freezing of Russian assets in the West. Gas deliveries would continue to be fully guaranteed, he assured. However, paying for Russian goods in foreign currency has lost its meaning. The West itself has devalued its currencies by freezing Russian assets abroad.
In response to Western sanctions, the Russian government decided earlier this month that its own financial obligations to “unfriendly states” would only be settled in rubles. These include Ukraine, Switzerland and Japan. The announcement by the head of the Kremlin promptly strengthened the Russian currency, which has been under massive pressure since the beginning of the war in Ukraine. In the afternoon, the ruble temporarily rose by 5.5 percent against the US dollar.
The stabilization is directly related to foreign exchange earnings from oil and gas sales. The currency’s value is being bolstered in a manner similar to how the central bank would intervene in the FX market – which it is currently unable to do due to Western sanctions. When a central bank buys its own currency, it increases demand and reduces supply in the market. This increases the price.